Freedom's A Survivor, Thrift's New Leader Says

July 6, 1986|By Tim Smart of The Sentinel Staff

TAMPA — A little more than a year ago, shareholders of Freedom Savings & Loan Association gathered here for the annual meeting with a sense of optimism.

Predatory investors seeking to acquire the thrift had backed away as their offers met with indifference or as problems of their own forestalled their efforts. There was another reason for optimism -- Freedom had just posted its first quarterly operating profit in more than four years.

Come Tuesday, however, when shareholders assemble in Freedom's reflective- glass, 13-story tower, one of those rebuffed investors will be standing at the podium, having recently assumed control of the financially troubled institution.

And there has been a change in Freedom's reported financial fortunes. The thrift, formerly First Federal Savings & Loan of Tampa, was recently forced to change its 1985 bottom line from a profit to a loss. It also lost $604,000 in the quarter ended March 31, and prospects for an immediate improvement look slim.

Still, there may be cause to look on the bright side, says Winter Park investor F. Philip Handy, the man now at the helm.

''We don't have Texas real estate, any South American loans, or any oil and gas,'' Handy said during an interview last week in his second-floor executive office atop Freedom's Winter Park building. ''We've got specific issues. There's not very many of them, and they're rectifiable.''

What bedevils Freedom at this point, according to its public filings with the Securities and Exchange Commission, is a weak capital position and some loans that are neither earning interest nor being repaid. The fact that $5.4 million in loans to a major shareholder, CB Financial Corp. of Oklahoma City, are not being repaid only compounds the problem.

The list of bad loans is ''like a page long,'' Handy said. ''The dollar magnitude isn't that great in the context of the size of the operation.''

That may be true, in that Freedom has $2.5 billion in assets and operates in two of the fastest-growing markets in the land, Tampa and Orlando.

But the bad loans are enough to worry state and federal regulators, who are keeping a close eye on Freedom. The company is operating under a supervisory agreement that requires it meet certain minimum capital requirements by year's end. To do so, Freedom must seek outside capital.

Handy's election as chief executive in late May followed the investment of $4.2 million by him and two Chicago investors, Sam Zell and Robert Lurie. Collectively, the three hold 10 percent of Freedom's outstanding stock and have acquired options that would allow them to double their holdings.

''I think that, from what I can understand, Handy has gone about doing what he's got to do,'' said Ron Goff, a vice president in Tampa for Allen C. Ewing & Co., a securities concern. ''He's rolling up his sleeves and wading in.''

''It's good for the company,'' Goff said. ''I don't mean to be crude, but somebody has to go in and kick some butts.''

Handy said he is moving quickly to restore the thrift to profitability, largely by cutting corporate overhead and by seeking to turn around loans that are ''non-performing'' or not earning interest. He promises a ''restructuring,'' the details of which he is not yet prepared to disclose.

''I'm going to take the reins of the company and, to the extent possible, create a new mind-set of profitability,'' he said.

In a recent ''Handygram'' -- what he terms his terse memos to subordinates -- Handy did away with company-paid cars that had been provided free to managers.

''I took away all the corporate autos -- I think we had 60. I put a freeze on all hirings and ordered no more capital expenditures,'' he said.

''I need to create a more efficient, more consumer-, more customer- oriented company.''

For Handy, returning to the Freedom office in Winter Park is something of a homecoming. He first worked there in 1976, a newcomer to the state from Wall Street, from which he had been plucked by Ohio investor Marvin Warner to help run ComBanks.

Six years later, Warner, who by then had acquired a 9 percent stake in Freedom, reached an agreement to sell ComBanks to Freedom. Freedom shareholders resisted the deal, but Warner persevered, buying more Freedom stock and ultimately prevailing. Freedom bought ComBanks in 1983 for $57.5 million, providing Warner with a $35 million profit.

A year later, Warner made a bid for Freedom from a new base at American Savings & Loan in Miami, in which he had acquired a sizable stake. But American founder Shepard Broad thwarted Warner's move, and Warner's problems in connection with the much-publicized failure of ESM Government Securities Inc. in March 1985 caused the deal to fall through.

Even so, Warner's shadow continued to darken Freedom's doorstep: When Handy made an unsuccessful bid for Freedom in November 1984, some suggested that fear of Warner, who had originally hired Handy for ComBanks in 1976, may have been responsible for the lack of action by Freedom's board.